Occupational Retirement Schemes

Hong Kong combines an established, low tax system with a pensions framework that attracts legitimate and transparent pension planning for both local and international clients. The basis of Hong Kong’s corporate pensions’ infrastructure is provided by the Occupational Retirement Schemes Ordinance (ORSO), which established a registration system for occupational retirement schemes that were established voluntarily by employers to provide retirement benefits for their employees.

ORSO schemes enable the sponsoring employer to decide the enrolment and eligibility arrangements, the contribution rates, and the minimum retirement age. They also permit a much wider range of investment options.

The Ordinance does not compel Hong Kong-based employers to set up occupational retirement schemes nor does it specify any minimum level of benefits. However, ORSO schemes offer the following advantages for the employer to set up a retirement scheme for their employees:

To provide an alternative means to fulfil the employer’s obligations to make long service payments and severance payments under the Employment Ordinance
To maximise the tax relief available under the Inland Revenue Ordinance in respect of the contributions made by the employer to a registered scheme
To provide incentives for attracting, rewarding and retaining quality staff.

Contributions can be made solely by the employer. Employees may also choose to contribute if they are permitted to do so under the particular terms of an ORSO scheme.



The Hong Kong government incentivises employers to contribute to Hong Kong-based ORSO schemes. Contributions into pension schemes on behalf of a company’s staff members get full tax relief against corporate profits tax, subject to a maximum of 15% of each of those individuals total annual remuneration.

ORSO schemes may also offer particular tax advantages to expatriate staff who intend to return to a country that has a double tax treaty with Hong Kong. A number of countries have entered into treaties with Hong Kong that specify that pension distributions from Hong Kong corporate retirement plans “in consideration of past employment” are only taxable in Hong Kong. These treaty partners include Belgium, Canada, the Czech Republic, France, Hungary, Indonesia, Ireland, South Korea, the Netherlands, Romania, Russia, Switzerland and the UK.


ORSO schemes are highly flexible because the coverage, enrolment arrangements, contribution rates and vesting scales can be chosen by the employer and specified in the respective governing rules of a scheme. They also permit a much wider range of investment options although the Ordinance does offer some protection by limiting the ability to invest into certain, risker assets classes. Contributions can be made solely by the employer, but employees may choose to contribute if permitted to do so under the particular terms of an ORSO scheme.


A trust-based ORSO structure, such as those set up by Sovereign, will ensure the legal separation of the scheme’s assets from those of its sponsoring employer. This provides an additional layer of comfort to employees and protects the plan from any party seeking to lay claim to the assets of the business.

The trustee of an ORSO scheme will be Sovereign Trust (Hong Kong) Limited, which is licensed as a Trust and Company Service Provider (TCSP) under Hong Kong’s licensing regime. All ORSO schemes are governed and regulated by the Mandatory Provident Fund Schemes Authority (MPFA) in Hong Kong.

Who can use an ORSO?

ORSO applies to all corporate schemes established in Hong Kong – irrespective of where the company is established or trades, or where its employees are based. The ORSO can be beneficial for employers using Hong Kong as a platform for regional retirement schemes because companies that are part of the same group may apply to become ‘Participating Employers’. This extends the potential membership to all the eligible employees and directors of these group companies. This can be particularly important for employees based in less politically stable countries.

Get in Touch

Please contact us if you have any questions or queries and your local representative will be in touch with you as soon as possible.